EveryWare files for Chapter 11 bankruptcy

June 2015 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

June 2015 Issue

EveryWare Global, Inc. has announced that, following discussions with its lenders, it (and all of its domestic subsidiaries) has reached an agreement to pursue a restructuring plan to strengthen its financial position under Chapter 11 of the Bankruptcy Code in the US Bankruptcy Court for the District of Delaware.

The company believes that the restructuring agreement will minimise the time and expense spent in a restructuring and will provide them with sufficient liquidity during the restructuring period.

Formed through the merger of Anchor Hocking LLC and Oneida Ltd in March of 2012, EveryWare is a leading marketer of tabletop and food preparation products for the consumer and foodservice markets, with operations in the United States, Canada, Mexico and Asia. Its global platform allows it to market and distribute internationally its total portfolio of products, including bakeware, beverageware, serveware, storageware, flatware, dinnerware, crystal, buffetware, premium spirit bottles, cookware, gadgets, candles, floral glass containers and other kitchen products, all under a broad collection of widely-recognised brands.

However, EveryWare’s revenues for the three months ended 31 December 2014 decreased in all segments, with the most significant decline seen in the company’s Consumer and Specialty segments. The decline in all segments was related to lower customer sales of negative margin products, lower order fulfilment rates and customer uncertainty surrounding EveryWare’s lender negotiations, which took place in the second and early third quarters of 2014.

Following the Chapter 11 filing in April, EveryWare’s asset-based lending (ABL) facility was amended so that it became a debtor-in-possession ABL facility as new loans are made, on a rolling basis, to ensure that the company continues to have access to the ABL facility during the Chapter 11 proceedings. Additionally, the borrowers under the term loan and the other parties thereto entered into a first priority, first-out debtor-in-possession credit facility in an aggregate amount of up to $40m, which is secured by the same collateral that secured the term loan and, subject to certain exceptions, other unencumbered assets of the loan parties.

Following a stress test analysis of forecasted results, EveryWare’s auditor informed them that the audit opinion would include an explanatory paragraph regarding the company’s ability to continue as a going concern. The inclusion of a going concern qualification would constitute a default under the term loan. As a result, EveryWare engaged in discussions with a number of its financial stakeholders regarding various restructuring alternatives to strengthen its balance sheet and create a sustainable capital structure for the future.

The auditor’s plan also contemplates the cancellation of 100 percent of the outstanding principal amount, PIK interest and accrued but unpaid cash interest of the term loans in the amount of $248.6m as of the Chapter 11 petition date (7 April 2015), in exchange for the issuance of new common stock equal to 96 percent of the new common stock issued by EveryWare upon emergence from bankruptcy.

“Our revenue decline is a lingering consequence of earlier operational challenges,” said Sam Solomon, chief executive of EveryWare. “We improved customer service in the fourth quarter and expect service levels will continue to rise. Twelve months of operational improvements enabled us to achieve positive EBITDA for the first time in a year while providing a stronger base to build upon.

“We reached an important restructuring agreement with our lenders. That process will eliminate our current term loan debt and reduce cash interest going forward. Our lenders have further provided $40m worth of financing through our pre-packaged bankruptcy to ensure our business continues to perform in the short-term and provides a good starting point for long-term success.”